22nd November 2024

Happy Friday crew. Let’s wrap the week up with all you need to know today in the wonderful world of oil, gas, and energy:

• 🪖 Oil for troops

• ⭕ Resuscitating Keystone XL

• ⬆️ US gas prices pop

• 😬 An awful day for Europe’s low carbon sector

• ➕ plus Trump takes aim at the IEA; Shell excitement in South Africa; trade wars and US / China LNG flows; Benny Netty’s arrest warrant; outage at Freeport LNG; Exxon quits Suriname block; Ithaca’s $200m dividend; and barrels more.

See you Monday.

📈 THE NUMBERS

US gas prices popped 20% this week to a one year high after a surprise draw from gas storage, cold winter weather forecasts, and a ramp up of LNG exports.

Rare good news for US gas E&Ps who’ve had a really rough time of it recently.

🗞️ WELL-HEADLINES

 🗽 North America

• Resuscitating Keystone XL - the controversial 1,200-mile pipeline was supposed to carry ~800 kb/d of Canadian heavy crude to US refineries but Biden blocked it on his first day in office. Rumors are that Trump will do the opposite on his first day.

• Trump taking aim at the IEA - reports suggest that Trump plans to cut US funding to the IEA, which has long since abandoned its founding role of promoting energy market stability and has instead become a mouth piece for the renewable lobby.

• Crude inventories edge up - US oil stocks rose by 0.55 mmbbls last week to ~430 mmbbls, slightly higher than expectations of a 0.14 mmbbls increase. Gasoline stocks were up by 2.1 mmbbls.

• Outage at Freeport LNG - one of the three trains at the US’ second largest LNG terminal is offline due to a technical fault. It’s not clear when it will be back up and running.

🏰 Europe

• Ithaca’s $200m special dividend - the indy announced the dividend following its merger with Eni’s UK business earlier this year, and said it was on course to return $500m to shareholders in 2024.

• Exxon launching Cyprus drilling next year - after 2 years of exploration work Exxon is set to drill a well in the prolific east-Med waters.

🕌 The Middle East

• Kuwait’s “massive investments” - KPC is looking to invest $33bn in the next five years to ramp up its oil capacity to 4 mmb/d by 2035 (from ~3 mmb/d today). That’s a big bet on the future of oil demand.

• Another Saudi rig suspension - Shelf Drilling is the latest victim. Contracts for ~29 jack-up drilling rigs have now been suspended in Saudi Arabia in recent months as it shelves various large development projects.

⛩️ Asia & Oceania

• Trade war casts doubt on US China LNG flows - US LNG exports to China have surged in recent years, but if Trump presses ahead with a proposed 60% tariff on Chinese goods, Beijing could retaliate by imposing duties on American gas. This happened in 2019 and US gas exports to China virtually dried up. The US is the world largest LNG exporter, and China the largest importer.

• Sinopec hits the jackpot in Sichuan - the latest discovery offshore China has added 55 bcm of proven natural gas reserves to the Tongnanba gas field, taking its total to 107 bcm.

• BP greenlights $7bn Indo gas project - the Tangguh UCC enhanced gas recovery project with carbon capture aims to unlock ~3tcf of additional gas resources. Meanwhile, one of the trains at BP’s Tangguh LNG is offline.

🦁 Africa

• Shell lining up South African wells - the major is firming up plans for two high profile exploration wells in South Africa’s Orange Basin, which borders the Namibian hotspot where E&Ps have recently discovered some whales.

🗿 Central & South America

• Exxon withdraws from key Suriname block - operator Petronas will take over Exxon’s 50% interest in block 52, offshore Suriname, where gas was initially discovered in 2020 but has since had development challenges. Exxon hasn’t been so lucky in Suriname as it has in neighboring Guyana.

• BP lands its first Trinidad exploration PSC - the award of the offshore block follows a bidding round launched by Trinidad & Tobago last year, aimed at increasing feed gas for it’s LNG export terminal.

• Petrobras approves $3.4bn extraordinary dividend - it’s raining cash over in Brazil.

• YPF after $2bn to finance pipeline - the 390 kb/d capacity Vaca Muerta Sur project will transport oil from Argentina’s Vaca Muerta formation to a coastal export terminal in Rio Negro province.

🌍 GEOPOLITICS & MACRO

• Russia and North Korea’s crude for troops swap - Russia has supplied North Korea with over 1 mmbbls of oil this year, supposedly as payment for the weapons and troops that North Korea is sending to fight in Ukraine.

• Putin hits back - days after Ukraine used US and UK made long range missiles to strike Russia, Putin has confirmed that Russia fired a “new” missile at Ukraine. The US said it had been notified "briefly" before the missile was launched through Nuclear Risk Reduction channels.

• Netanyahu’s arrest warrant - the International Criminal Court has issued arrest warrants for the Israeli PM, his former defence minster, and an already-dead Hamas official for alleged war crimes. Israel and the US are not members of the ICC but 124 other countries are. It remains to be seen what, if anything, they will do about it. There’s a similar arrest warrant out for Putin.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Equinor axes 20% of renewables staff - yet more evidence that oil companies are finally realizing that investing in loss-making renewables projects might appease some hysterical greens but isn’t good for business.

• Exxon’s lithium sales deal - the IOC is making strides in its lithium ambitions by signing an offtake agreement in the US with LG Chem. Exxon will supply 100,000 tons of lithium to LG from its planned production project in Arkansas.

• Northvolt files for bankruptcy - the once darling of the European battery industry announced it only has a enough cash to last for a week. The battery manufacturer has $5.8bn in debt and has struggled to compete with Chinese rivals, while EV demand in Europe has underwhelmed.

• Indonesia pledges fossil fuel power phase out in 15 years - the Southeast Asian nation, with a giant population of ~280 million, relies on coal and gas for 80% of its power needs. It thinks it can replace all that with renewables in just 15 years. This won’t end well.

• Ford blames EVs for 4,000 European job cuts - the woes just keep piling up for the European automobile industry.

🛢️ BOTTOM OF THE BARREL

I’ve said it before, and I’ll say it again..

There’s no such thing as an energy transition.

Hysterical media and politicians shouting about it doesn’t make it so.

👋 BEFORE YOU GO

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Thanks for reading. Have a day out there. 🛢️🛢️

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